Trinity Place Holdings (TPHS) Risk Analysis

In connection with the investment in us by Third Avenue Trust, on behalf of Third Avenue Real Estate Value Fund ("Third Avenue"), Third Avenue was issued one share of a class of special stock and our certificate of incorporation was amended to provide that, subject to the other terms and conditions of our certificate of incorporation, from the issuance of the one share of special stock and until the "Special Stock Ownership Threshold" of 2,345,000 shares of common stock is no longer satisfied, Third Avenue has the right to elect one director to the board of directors. In addition, pursuant to the terms of the Stock Purchase Agreement, upon the earlier of (i) the delisting of the Company's common stock and (ii) three (3) months following the closing of the Recapitalization Transactions, the Company must take all action reasonably necessary to cause the board of directors to be reduced to five (5) members, constituted as follows: (i) two (2) members appointed by Investor, each of which may either be independent or interested, as determined by the Investor; (ii) two (2) members appointed by the Company, either or both of which may be current members of the board; and (iii) one (1) member to be mutually agreed upon and appointed by, the Company and Investor.  As a result, for so long as these board appointment rights are in effect, Third Avenue and the Investor may be able to exert influence over our policies and management, potentially in a manner which may not be in our best interests or the best interests of the other stockholders.

More than 60% of our shares of common stock are controlled by three of our stockholders, including over 40% of our common stock being owned by the Company Investor following the Recapitalization Transactions. As a result, these stockholders may have the ability to significantly influence the outcome of issues submitted to our stockholders for a vote. The interests of these stockholders may not always coincide with our interests or the interests of other stockholders, and they may act in a manner that advances their best interests and not necessarily those of other stockholders. The concentration of ownership could also deter unsolicited takeovers, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices.

A decline in the price of our common stock, whether as a result of market conditions, sales of a substantial number of shares of our common stock, or other reasons, may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate, which would impair our ability to raise capital. Capital-raising transactions resulting in a large amount of newly issued shares that become readily tradable, or other events that cause current stockholders to sell shares, could place downward pressure on the trading price of our stock. In addition, the lack of a robust resale market may require a stockholder who desires to sell a large number of shares of common stock to sell the shares in increments over time to mitigate any adverse impact of the sales on the market price of our stock. If our stockholders sell, or the market perceives that our stockholders intend to sell for various reasons, including the ending of restrictions on resale of substantial amounts of our common stock in the public market, including shares issued upon the exercise of outstanding options, the market price of our common stock could fall. A significant amount of restricted shares previously issued by us have been registered for resale on registration statements filed with the SEC.

We may issue additional equity securities in capital raising transactions or otherwise, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 120,000,000 shares of capital stock consisting of 79,999,997 shares of common stock, two shares of a class of preferred stock (which were redeemed in accordance with their terms and may not be reissued), one share of a class of special stock and 40,000,000 shares of blank check preferred stock. As of December 31, 2023, there were 38,199,386 shares of our common stock, one share of special stock, and warrants to purchase 6,429,000 shares of our common stock outstanding. In connection with the Recapitalization Transactions, we issued 25,112,245 shares of common stock to the Company Investor and the 6,429,000 warrants were cancelled. We have in the past and we may in the future raise additional capital through public or private offerings of our common stock or other securities that are convertible into or exercisable for our common stock. Any future issuance of our equity or equity-linked securities may dilute then-current stockholders' ownership percentages and could also result in a decrease in the fair market value of our equity securities, because our assets would be owned by a larger pool of outstanding equity. We may also issue such securities in connection with hiring or retaining employees and consultants, as payment to providers of goods and services, in connection with future acquisitions and investments, development, redevelopment and repositioning of assets, or for other business purposes. Our board of directors may at any time authorize the issuance of additional common stock without stockholder approval, unless the approval of our common stockholders is required by applicable law, rule or regulation, including NYSE American regulations, or our certificate of incorporation. The terms of preferred or other equity or equity-linked securities we may issue in future transactions may be more favorable to new investors, and may include dividend and/or liquidation preferences, anti-dilution protection, pre-emptive rights, superior voting rights and the issuance of warrants or other derivative securities, among other terms, which may have a further dilutive effect. Our previously outstanding warrants also contained these types of provisions. Also, the future issuance of any such additional shares of common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that any such future issuances will not be at a price or have conversion or exercise prices below the price at which shares of the common stock are then traded.

Under the Stock Purchase Agreement, we have agreed to use reasonable efforts to complete the deregistration from the reporting obligations under Section 12 and Section 15 of the Exchange Act, including all associated reporting obligations,no later than one hundred and thirty-five (135) days following the closing of the Recapitalization Transactions, unless certain conditions under the Stock Purchase Agreement are met or as otherwise agreed by the parties. Section 12(g)(4) of the Exchange Act allows for the registration of any class of securities to be terminated after a company files a certification with the SEC that the number of holders of record of such class of security is fewer than 300 persons. As of March 29, 2024, there were 134 stockholders of record of our common stock. This does not include the number of shareholders that hold shares in "street name" through banks, brokers and other financial institutions. Accordingly, we are eligible to deregister our common stock and suspend our reporting obligations under the Exchange Act. If we were to terminate our registration and suspend our reporting obligations under the Exchange Act, we would no longer be required to comply with U.S. public company disclosure requirements under the Exchange Act, including, but not limited to, annual and quarterly report filings, proxy statement filings and filings by insiders to disclose the acquisition and disposition of our securities.

On November 29, 2023, the Company was notified by the NYSE American that the Company was not in compliance with the NYSE American continued listing standards set forth in Sections 1003(a)(i) and (ii) of the NYSE American Company Guide (the "Guide"). Section 1003(a)(i) of the Guide requires a listed company's stockholders' equity be at least $2.0 million if it has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years. Section 1003(a)(ii) of the Guide requires a listed company's stockholders' equity be at least $4.0 million if it has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. The Company reported a stockholders' deficit of $(1.2) million as of September 30, 2023, and losses from continuing operations and/or net losses in three of its four most recent fiscal years ended December 31, 2022.  In order to maintain the Company's listing on the NYSE American, the NYSE American requested that the Company submit a plan of compliance (the "Plan") advising of actions it has taken or will take to regain compliance with Section 1003(a)(i) and (ii) of the Guide by May 29, 2025. On January 4, 2024, the Company was notified by the NYSE American that it had determined that the Company's securities had been selling for a low price per share for a substantial period of time and, pursuant to Section 1003(f)(v) of the Guide, the Company's continued listing was predicated on it effecting a reverse stock split of its shares of common stock or otherwise demonstrating sustained price improvement by no later than July 4, 2024.  The notice stated that, as a result of the foregoing, the Company had become subject to the procedures and requirements of Section 1009 of the Guide, which could, among other things, result in the initiation of delisting proceedings, unless the Company cures the deficiency in a timely manner. The NYSE American could also take accelerated delisting action if the common stock trades at levels viewed to be abnormally low. On February 21, 2024, the NYSE American notified the Company that it had reviewed the Plan that the Company submitted to the NYSE American and determined to accept the Plan and grant a cure period through May 29, 2025. As a result of the acceptance of the Company's Plan, the Company's listing is being continued pursuant to an extension.  The NYSE American will review the Company periodically for compliance with the initiatives outlined in the Plan. If the Company is not in compliance with the continued listing standards by May 29, 2025 or if the Company does not make progress consistent with the Plan during the cure period, the NYSE American staff will initiate delisting proceedings as appropriate In addition, under the terms of the Stock Purchase Agreement, the Company must complete the delisting of its shares of common stock from the NYSE American no later than forty-five days following the closing, unless certain conditions under the Stock Purchase Agreement are met or as otherwise agreed by the parties, which timeframe was subsequently extended by 30 days. If we fail to regain compliance with the continued listing requirements of the NYSE American, the NYSE may take steps to delist our common stock.  We may also be delisting our common stock in the near-term, as required under the terms and conditions of the Stock Purchase Agreement. In the event the common stock is delisted from the NYSE American, such a delisting would likely have a negative effect on the price of our shares of common stock and would impair your ability to sell or purchase our securities when you wish to do so. Additionally, if our common stock is not listed on, or becomes delisted from, the NYSE American for any reason, including as a result of our taking steps to delist our common stock as required under the terms of the Stock Purchase Agreement, and is quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our common stock may be more limited than if it were quoted or listed on the NYSE American or another national securities exchange. You may be unable to sell your shares unless a market can be established or sustained.

Our common stock, currently listed on the NYSE American, is thinly traded. Because our common stock is thinly traded, even small trades can have a significant impact on the market price of our common stock, especially when there are limited buyers in the market.  We cannot assure stockholders that an active market for our common stock will develop in the foreseeable future or, if developed, that it will be sustained. In addition, we may determine the benefits of listing our shares on the NYSE American do not merit the associated costs.  As a result of these factors, stockholders may not be able to resell their common stock. Volatility in the market price of our common stock and lack of liquidity may prevent stockholders from being able to sell their shares at or above the price paid for such shares. The market price of our common stock could fluctuate significantly for various reasons, many of which are beyond our control, including: - our ability to raise additional capital to fund our cash needs, obtain additional financing and refinance existing loans and on favorable terms or evaluate and potentially consummate a strategic transaction and realize the anticipated benefits of any such transaction;- the potential issuance of additional shares of common stock including at prices that are below the then-current trading price of our common stock;- changes in the real estate markets in which we operate, especially New York City;- our ability to develop or redevelop or successfully sell units in 77 Greenwich or at other properties in the future;- volatility in global and/or U.S. equities markets;- our financial results or those of other companies in our industry;- the public's reaction to our press releases and other public announcements and our filings with the SEC;- new laws or regulations or new interpretations of laws or regulations applicable to our business;- changes in general conditions in the United States and global economies or financial markets, including those resulting from inflation, rising interest rates, war, incidents of terrorism or responses to such events;- sales of common stock by our executive officers, directors and significant stockholders;- changes in generally accepted accounting principles, policies, guidance, or interpretations; and - other factors described in our filings with the SEC, including among others in connection with the risks noted in this Annual Report on Form 10-K. In addition, while our common stock remains thinly traded, small sales or purchases may cause the price of our common stock to fluctuate dramatically up or down without regard to our financial health or business prospects. Downward fluctuations can impair, and have impaired, our ability to raise equity capital on acceptable terms.

The Company's certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on the Company's behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against the Company arising pursuant to the Delaware General Corporation Law, the Company's certificate of incorporation or bylaws; or any action asserting a claim against the Company that is governed by the internal affairs doctrine.  This provision is not intended to apply to claims arising under the Securities Act and the Exchange Act. To the extent the provision could be construed to apply to such claims, there is uncertainty as to whether a court would enforce the provision in such respect, and the Company's stockholders will not be deemed to have waived the Company's compliance with federal securities laws and the rules and regulations thereunder. The exclusive forum provision may discourage claims or limit stockholders' ability to submit claims in a judicial forum that they find favorable and may create additional costs as a result. If a court were to determine the exclusive forum provision to be inapplicable and unenforceable in an action, we may incur additional costs in conjunction with our efforts to resolve the dispute in an alternative jurisdiction, which could have a negative impact on our results of operations.

Our certificate of incorporation and bylaws and Delaware law contain provisions that could delay or prevent a change in control of us. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. In addition to the matters identified in the risk factors above relating to the provisions of our certificate of incorporation, these provisions include: - a classified board of directors with two-year staggered terms;- limitations in our certificate of incorporation on acquisitions and dispositions of our common stock designed to protect our NOLs and certain other tax attributes; and - authorization for blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock. These and other provisions in our certificate of incorporation and bylaws and under Delaware law could discourage potential takeover attempts, reduce the price that investors might be willing to pay in the future for shares of common stock and result in the market price of the common stock being lower than it would be without these provisions.